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Laurent Fabius has taken issue with Barack Obama, after the US president blamed Europe for his country's economic woes. Thibault Camus/AP
Debt Crisis

French minister blames US for creating eurozone's debt crisis

France’s new foreign minister hits back at Barack Obama, saying: ‘Lehman Brothers was not a European bank.’

FRANCE’S FOREIGN MINISTER has hit back at comments by US President Barack Obama about the threat of the European debt crisis, saying it had originated in the United States.

“The crisis did not start in Europe… Lehman Brothers was not a European bank,” Laurent Fabius said after talks with his counterpart Giulio Terzi in Rome.

“We should not shift responsibility. We’re all in the same boat,” he said.

Obama said on Saturday that Europe’s economic woes were causing trouble for the United States’ own economy, after the US unemployment rate rose for the first time in almost a year, spelling trouble for his re-election bid.

“The crisis in Europe’s economy has cast a shadow on our own. And all of this makes it even more challenging to fully recover and lay the foundation for an economy that’s built to last,” he said in his weekly radio and Internet address.

Fabius also said today that the EU should find a “practical method” to help Spanish banks, adding that Spain was in “a very difficult economic situation.”

“We could have expected the borrowing costs to go down but that is not what has happened. We are faced with a considerable difficulty,” he said.

We now have to find a practical method for the Spanish banking system to function without increasing the deficit, which would raise borrowing costs.

“The European system as a whole has to find a solution to avoid suffocation,” said Fabius, a former prime minister and finance minister. ”It’s urgent. Decisions have to be taken in the next few weeks.”

As bond markets charge exorbitant rates to lend to Spain, investors fear that Madrid may be forced to seek external aid to finance a bailout of the country’s bad loan-ridden financial system.

Stricken Spanish lender Bankia alone has asked for a total of €23.5 billion to help repair a balance sheet that has a vast exposure to the property market, which crashed in 2008.

- © AFP, 2012

Read: FT warns Spain against Irish path of saving the banks

More: Spain sees cost of borrowing rise, as major bank seeks €19bn bailout

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